Congress enacted PEC ignoring consultancy criticism

Congress enacted the proposal that boosts social benefits on the eve of the elections, ignoring criticisms from the House Budget Consultancy, which sees in the text the creation of disproportionate privileges and exemptions from obligations if considered the current scenario. In addition, the technicians consider that equality in the electoral process is compromised.

The PEC (proposed amendment to the Constitution) that endorses the payment of new benefits to the population contains seven measures. Among them, expansion of Auxílio Brasil from R$400 to R$600 by the end of the year, doubling of Auxílio Gás to around R$120 and the creation of a R$1,000 voucher for truck drivers.

In addition, the text provides for aid for taxi drivers, transfer of resources to avoid price increases in public transport, subsidies for ethanol and reinforcement of funds in the program for purchasing and donating food. The total cost is estimated at R$ 41.25 billion.

The creation of new programs is prohibited by electoral legislation this year, but the PEC sought to circumvent this restriction even using the recognition of a state of emergency in the country due to the higher price of oil.

For technicians, fluctuations in commodity prices (especially oil) and the rate of inflation are not enough to recognize a state of emergency.

A justifiable situation would be seen, for example, in scenarios of extreme weather events or a pandemic that would make production processes unfeasible for a considerable period of time.

“Economic crises by themselves would be a much more fragile argument, since they are recurrent and often reinforced by inappropriate or untimely actions by public agents themselves”, states the text. The consultancy published the document on July 12, one day before the approval of the second round in the Chamber.​

The technicians also say that there are differences between the state of emergency and the state of public calamity, the latter being more serious and which already provides for certain flexibility in public accounts for the release of resources (dispensing, for example, with the achievement of fiscal targets and the adoption of of budgetary compensation measures).

The enacted PEC recognizes the state of emergency in the country, but creating the same exemptions and privileges that would only be provided for in a state of calamity – which, for the consultancy, is unreasonable. “Virtually every tax defense mechanism is given up disproportionately to the situation that is envisioned”, says the technical note.

The note adds that the PEC, by creating a state of emergency at the end of the term, with new expenses, seems to reverse the democratic sense of the legislation protecting electoral isonomy.

The technical note was requested by deputy Adriana Ventura (Novo-SP) and includes subsidies on the fiscal and budgetary aspects of the PEC.

The document points out that the continued weakening of fiscal principles is perhaps the most worrying aspect of the approval of the PEC. According to the text, fiscal rules serve to guide the behavior of political agents and curb budget imbalances.

The technical note points out that the new government will find it difficult to reduce benefits, even those effective until December this year, in particular the changes in Auxílio Brasil. Although the PEC limits the payment of benefits until December, the entry of new families into the program will also be felt in the coming years.

“Excluding the payment of the extraordinary increase of BRL 200.00, whose payment is limited to 12.31.2022, it is estimated that the impact of the entry of 2.6 million families into the program could reach the amount of BRL 12.5 billion by 2023,” the note said.

The PEC is one of Bolsonaro’s bets to try to improve his performance in polls. Currently, he appears in second place, behind former president Lula.

The PEC was accelerated by the mayor, Arthur Lira (PP-AL), an ally of Bolsonaro. Instead of following the regimental rite of having the admissibility analyzed by the CCJ (Committee on Constitution and Justice) and only then being forwarded to a special commission for analysis of the merits, the text was appended to that of the PEC for biofuels, which had already passed the initial stage and was on special commission.